RF's Financial News

Sunday, May 25, 2014

There's an old saying that if you
see one roach, you're infested. Why? Because they are prolific breeders and can
multiply in amazing numbers.While they
are disgusting little creatures, they are indeed incredible survivors, and
impossible to control.

So, why talk about roaches? Every day actions are being taken by foreign
nations to rid themselves of U.S. dollars. Every day there are alliances, pacts, contracts
and deals that are being created in which the U.S. is NO LONGER a part. Each one of these deals takes a small bite out
of the U.S. economic supremacy that we fought so hard to attain. The war is being won by the East and lost by
the U.S. – very rapidly.A few examples
announced last week:

-Russia
plans on supplying natural gas to China for the next 30 years. (Every payment methodology being discussed does
NOT include U.S. dollars.)

-China plans
to build a high-speed rail line (carrying passengers and industrials) for Kenya
(No U.S. dollars are involved.)

-And China
signed an additional 15 agreements within Africa for over $11 Billion dollars
for infrastructure improvements. (No
U.S. dollars are involved – an exchange for natural resources is being contemplated.)

This summer the BRICs will launch
their version of a development bank. China
and Russia are the major players, but it isn’t just the headline names (Brazil,
Russia, India and China) that are going to be involved. Argentina, Qatar, Iran, Vietnam and Mexico are
also joining the fold.The U.S. was not
asked (nor will it be asked) to be a part of this development bank.

In India the recent elections have
brought in the Modi regime.The regime
has promised many modifications to name a few: (a) They said that they would do
away with any gold surcharges that the last administration put in place in
order to try and limit gold sales.(b) They
are pro business, and therefore can expect to see broad alliances with Iran,
and the African nations. And (c) they
have mentioned looking to China for substantial financial help going forward.

Ask yourself, how many headlines (in
the past couple of years) have had anything to do with the U.S. expanding trade
to secure much needed resources? Not
many. Over a year ago I began talking
about a 'Global Reset’ where the U.S. dollar loses its global reserve status,
and the world re-prices virtually everything. Everywhere I look I see the pieces coming
together. The world is tired of the constantly,
devalued U.S. dollar and once the Russians, the Chinese and the Indians all
come together and hammer out their desires, the U.S. dollar will be removed
from its 70-year level of importance.We’ve
been the world’s safe haven for decades, and we’ve squandered it.

The fact that the ‘Global Reset’ is coming
is solid.The only question is
timing.I think it will happen sooner
than most people think.It will be like
the homeowner that sees that first roach, waits until he sees a couple more, and
then realizes that they’re everywhere.Then he kicks himself for not taking action sooner.The same thing is true with the collapse of
the U.S. dollar. Everyone's going to say:
"What happened?”It is by no small coincidence
that you're not going to hear about the collapse of the dollar until the day
you wake up and it is ‘Done’.The
President will come on television to announce a ‘Bank Holiday’ for several days
while we make ‘currency adjustments.’ It’s
not an IF anymore; it’s just a WHEN.

The Market:

The good and bad news about the
markets as of late, is that any upward movements have been on the ‘lowest
volume of the year.’And although it’s
nice to move upward, rather than downward – trends are dictated by volume.Downward movements have been on very high
volume, while upward movements have been on extremely light volume.This tells me that the path of least
resistance for the markets is downward.But, that not withstanding, we did set new, all-time highs on the S&P
this week.

Friday we learned that Italy (in
order to boost their GDP – and to have their national debt ratio remain in line
with their borrowing), has decided to include Drugs, Prostitution and Smuggling
in their GDP calculations. You read that
correctly. They are going to begin to add
the value of junkies and hookers to their GDP.That literally caused me to stop and realize that the entire world’s
numbers are now just a fantasyland.Heck, why even bother printing GDP numbers if you're going to include
cocaine and black market dealings? You
may ask: Where (and How) are you getting the numbers for Drugs, Prostitution
and Smuggling?And why not just say:
"All of our numbers are fake” and move on?

Speaking of absurd, I often get mail
from readers telling me that I’m crazy for suggesting that the metals market is
the most manipulated market on earth.On
Friday, Barclays Bank came out and admitted that it had been manipulating the
price of gold for the past ten years, so that it could avoid paying out options
gains to its own customers. And what was their penalty?It was a ‘slap on the wrist’ and a promise to
never do it again.

M.W. had a great market quote this
week: “The Federal Reserve has taken the place of
the Venture Capitalists of the Dot.Com era and the Mortgage Lenders of the
Housing Boom era. The market is rallying
because money flow is FORCED into equities as cash and bonds are made
artificially unattractive. The media and
many others continue to believe the economy is doing well and is improving,
because they mistakenly correlate the market rally with the economy. Remember, the Dot.Com rally and Housing Boom, were
both created on borrowed money, leveraged debt, and a blind faith that the New
Economy couldn’t come down."

Factually:

-The Russell 2000 (an index of small-cap stocks) represents approximately
10% of the total market capitalization of the United States. Small-caps
are often viewed as a barometer for investors’ risk appetites. When bulls are in control you’ll see these
names leading the charge. In the 8 years
since 2000 that the market was positive, the small-caps have averaged annual
returns of 23% (40% higher than the average return of the S&P.)

-However, the first five months of 2014 have not been kind. Small-caps are down 4.5%.

For the first time since November 2012 they:
(a) closed below their 200-day moving average, and (b) put in a 10% decline –
peak-to-trough. This is small caps’ 36th peak-to-trough decline of at least
10% since 2000.

-Of the first 35
peak-to-trough corrections, EVERY
ONE was accompanied by large-caps falling, on average 12.8%. Lately however, the Russell 2000 is down by
10%, while the S&P 500 is up 0.12%.

-If the Russell can’t find some sort of bottom soon, this small
cap (mom and pop) contagion could spread to the Colgate’s and Kimberly Clark’s
of the world.

The way I see it:

-Either history repeats itself, and the S&P 500 and DOW
follow the lead of small caps and correct downward, OR

-There is a summer rally taking the S&P over 2,000, and
causing casual investors around the country to reach for their margin accounts
in order to ‘bet the farm’ – just like in 1999.

-To me, it
feels like the elites have decided to push this market further than any sane
person would guess, and we're going to break out and punch higher. Of course it's insane, but sanity left the
building years ago.

The key will be HOLDING these highs
for more than just a couple of days. We
will need to hold these highs and stabilize; otherwise it will indeed be
another failed breakout attempt. So
watch the S&P and see what it does next week. The only warning I will give is this: If the
S&P 1,900 doesn't hold, we could see the markets toss in the "Sell in
May and go Away" towel. The fall
could be bigger than anyone expects. So,
watch the S&P Index to see that it remains above 1,900.

Tips:

Factually:

-Congrats to those
of you who were with me on the DRTX trade.On Friday the FDA did approve their skin care treatment and the stock
continued to rally.Between the stock price
and options increases, we’re going to record another 100% gainer over a one
month time period.

-The portfolio is up
over 50% year to date.(Hopefully that
doesn’t jinx us going forward.)

-We sold FET, FPP,
NLGS for small gains this past week, and purchased more MNKD and DRTX.

-TLT continues to be
a channel trade.The latest channel
shows TLT a ‘sell’ when it gets to 115+.

-MNKD continues to
rally into it’s FDA date – sometime in mid July.The stock gained over 10% again last week –
and the associated options added another 2 percent to that.

-Our small cap
energy plays continue to do well: BXE, FET, FPP, HK, PFIE, HTM, PQ, and
VTNR.And I have added 3 new stocks to
our small cap play list: ASX (Advanced Semiconductor Engineering – a technology
company), UIHC (United Insurance Holdings, Corp.), and SPIL (Silicon Precision
Industries – a tech company).You can’t
help but fall in love with their charts, along with their most recent
gains.I’m trying to grab some of these
small caps – in order to hold them for years and potentially watch them become
10-baggers within the next 18 to 24 months.

Also, I’m still a buyer of NUGT at these levels –
but mostly collecting premium by:

-Buying an equal
amount of DUST / NUGT (so that the stocks offset their own rises and falls)

Expressed
thoughts proffered within the BARRONS REPORT, a Private and free weekly
economic newsletter, are those of noted entrepreneur, professor and author, R.F.
Culbertson, contributing sources and those he interviews. You can learn more and get your free
subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please
write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any
reproductions, including when and where copy will be reproduced. You may use in
complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If
you'd like to view RF's actual stock trades - and see more of his thoughts -
please feel free to sign up as a Twitter follower - "taylorpamm" is the handle.

If
you'd like to see RF in action - teaching people about investing - please feel
free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

To
unsubscribe please refer to the bottom of the email.

Views
expressed are provided for information purposes only and should not be
construed in any way as an offer, an endorsement, or inducement to invest and
is not in any way a testimony of, or associated with Mr. Culbertson's other
firms or associations. Mr.
Culbertson and related parties are not registered and licensed brokers. This message may contain information
that is confidential or privileged and is intended only for the individual or
entity named above and does not constitute an offer for or advice about any
alternative investment product. Such advice can only be made when accompanied
by a prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note:
Joining BARRONS REPORT is not an offering for any investment. It represents
only the opinions of RF Culbertson and Associates.

PAST
RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS
THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING
ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER
VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE
INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT
TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN
ONLY TO THE INVESTMENT MANAGER.

Alternative
investment performance can be volatile. An investor could lose all or a substantial
amount of his or her investment. Often, alternative investment fund and account
managers have total trading authority over their funds or accounts; the use of
a single advisor applying generally similar trading programs could mean lack of
diversification and, consequently, higher risk. There is often no secondary
market for an investor's interest in alternative investments, and none is
expected to develop.

All
material presented herein is believed to be reliable but we cannot attest to
its accuracy. Opinions expressed in these reports may change without prior
notice. Culbertson and/or the staff may or may not have investments in any
funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

Sunday, May 18, 2014

To highlight
the fact that much of the country is drowning in spring rains – S.F.
contributed the following:

God:In the year 2013, the Lord came
unto Noah and said: “Once again, the earth has become evil.Build another Ark and save 2 of every living
thing along with a few good humans. Here are the blueprints and you have 6
months to build the Ark before I will start the unending rain for 40 days and
40 nights.”

God:6
months later, seeing Noah weeping in his yard – but no Ark, said: “Noah!I’m about to start the rain!Where is the Ark?”

Noah:“Please
forgive me Lord, but things have changed.It seems that:

-I needed a building permit

-And I’ve been arguing with the Boat Inspector about
the need for a sprinkler system.

-My neighbors claim that I’ve violated the
Neighborhood By-Laws by building the Ark in my back garden and exceeding the
height limitations.

-Then the local Electric Company demanded compensation
for the future costs of moving power lines and other overhead obstructions, to
clear the passage for the Ark’s move to the sea. I told them that the sea would be coming to
us, but they would hear nothing of that.

-Then there was a ban on cutting local trees in order
to save the Greater Spotted Barn Owl. I
tried to convince them that I needed the wood to ‘Save the Owls’ – but no go.

-Then when I started gathering the animals the ASPCA insisted
that I was confining wild animals against their will. The said that the accommodations were too
restrictive, and it was cruel and inhumane to put so many animals into a
confined space.

-The Human Rights Commission filed a petition on my
needing more minorities for my building crew.

-Immigration is still checking the Visa status the individuals
that are working with me.

-The Trade Unions say that I can’t use my sons – as
they are non-union.

-And the IRS (Internal Revenue Service) has seized
all of my assets, claiming that I’m trying to leave the country illegally with
endangered species.

-So forgive me Lord, but I think that it will take me
at least 10 years to finish this Ark.”

God:Suddenly
the skies cleared, the sun began to shine, and a rainbow stretched across the
sky.

Noah: Looking
up in wonder asked: “You mean you’re not going to destroy the world?”

God:No,
clearly the Government has beaten me to it.

The Market...

Factually this week:

-Industrial
Production unexpectedly dropped in April.Output at factories, mines and utilities decreased by 0.6%, while
manufacturing alone decreased 0.4%.

-Confidence among U.S. homebuilders dropped in May to the lowest
level in a year.This tells us that the residential
real estate market may be slow to recover after an unusually harsh winter.Tight credit conditions, limited availability
of lots and falling affordability as home prices rise are preventing the
residential real-estate market from gaining momentum.

-As Wal-Mart missed top and bottom line financials last week, the
sales of ultra-high end homes have never been better.Registered sales have climbed from $85M to
over $149M – for a single family home.

-Inflation came in ‘hot’ this past week at over 0.3% per
month.The reality is that inflation is
over 9%, but having the government admit to something > 2% is a step in the
right direction.

-David
Tepper (the brash billionaire hedge fund owner) spoke at the SALT conference
this week and said that that he liked Apple long, the Russell 2000 Index short,
and urged attendees: “It’s not time to go all short, but don't be too friggin’
long either."

In the beginning of the week, the
market’s tolerance for ignoring bad news was high:

-Every
report out of China missed estimates to the downside,

-Germany's
ZEW report crashed for 10 whole points,

-And the
U.S. retail sales figures (which were supposed to be growing like weeds after
the winter’s "weather" excuse) came in up a paltry 0.1%. And if you took out gasoline sales – then retail
sales actually declined.

But on Wednesday the wheels of the
market began to come-off and we closed down 101 DOW points and 9 S&P
points.We lost the all time highs, and
also lost the 50-day moving average on the XLF (which is the financial sector).
Neither of these are bullish
indications. While one day does not a
market make, we have high global tensions, bad economic reports, ugly earnings,
and ‘Sell in May and Go Away’ hanging over our heads.

Thursday turned out to be even more
ugly than Wednesday. We dropped like a
rock coming out of the gate, and at one point were down 234 points. The shorts covered some by the close, but we
still lost almost 170 DOW points.The
key was the 50-day moving averages.Both
major indexes used their respective 50-day moving averages as support, and bounced
higher off of them. That's important, because
market technicians need visible levels of support.

If the DOW and/or the S&P lose
their 50-day moving averages, they can fall a long way before their next really
solid support level. So, we need to
watch those levels.And, each time these
levels are defended, the defense becomes tougher and tougher to manifest.After all, retail sales are not that
encouraging.Of the 51 retailers that
have announced earnings thus far, they are DOWN an average of almost 4% under last
year.And the pseudo housing recovery is
dead.Rental units are all that is being
built.

No matter where I look, you can make
the case for this market finally giving up the ghost. However, we've seen this movie before. All I can do is follow the numbers. If the numbers fail their 50-day moving
averages – it’s time to get seriously cautious. If the market pushes back up to it’s old highs
and gets rejected – it’s time to get seriously cautious. In between those levels, we can chop around
for days and even weeks.

We ended Friday with a show of
bravado with the DOW gaining 45 points. If nothing goes ‘bump in the night’, I think
we will run higher early in the week and attempt a ‘break-out’.However, if this ‘break-out’ fails, we could
finally ‘break-down’.

Tips:

Congrats to those of you who were with me on the TLT
trade.We cashed in those calls at $114,
for a 1.5 week – 100% gain.I will dive
back into TLT around $112.TLT has been (for
the past 6 months) one of those 5 days on – 5 days off types of trades.That means I purchase at the bottom of a
channel and (approximately 4 to 5 days later) I sell when it reaches the top of
its channel.I then wait for another 4
to 5 days – when it drifts to the bottom of the channel – and then I buy again.

Double congrats to those of you sticking in the MNKD
trade as it gained over 10% last week.A
new pharma play has emerged: DRTX.It
has a drug receiving FDA approval on or around May 26th, 2014. And it also has a nice 10% monthly covered
call yield – coupled with a 9% upward move in the stock.So if you DO get called out of the stock, you
will have accumulated close to a 20% gain in one month.

I also continue to like the small cap energy sector,
and specifically stocks such as:BXE,
FET, FPP, HK, PFIE, HTM, PQ, and VTNR.

Finally, I’m a buyer of Gold (GLD), Silver (SLV),
and NUGT at these levels.

Expressed
thoughts proffered within the BARRONS REPORT, a Private and free weekly
economic newsletter, are those of noted entrepreneur, professor and author, R.F.
Culbertson, contributing sources and those he interviews. You can learn more and get your free
subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please
write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any
reproductions, including when and where copy will be reproduced. You may use in
complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If
you'd like to view RF's actual stock trades - and see more of his thoughts -
please feel free to sign up as a Twitter follower - "taylorpamm" is the handle.

If
you'd like to see RF in action - teaching people about investing - please feel
free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

To
unsubscribe please refer to the bottom of the email.

Views
expressed are provided for information purposes only and should not be
construed in any way as an offer, an endorsement, or inducement to invest and
is not in any way a testimony of, or associated with Mr. Culbertson's other
firms or associations. Mr.
Culbertson and related parties are not registered and licensed brokers. This message may contain information
that is confidential or privileged and is intended only for the individual or
entity named above and does not constitute an offer for or advice about any
alternative investment product. Such advice can only be made when accompanied
by a prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note:
Joining BARRONS REPORT is not an offering for any investment. It represents
only the opinions of RF Culbertson and Associates.

PAST
RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS
THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING
ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER
VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE
INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT
TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN
ONLY TO THE INVESTMENT MANAGER.

Alternative
investment performance can be volatile. An investor could lose all or a
substantial amount of his or her investment. Often, alternative investment fund
and account managers have total trading authority over their funds or accounts;
the use of a single advisor applying generally similar trading programs could
mean lack of diversification and, consequently, higher risk. There is often no
secondary market for an investor's interest in alternative investments, and
none is expected to develop.

All
material presented herein is believed to be reliable but we cannot attest to
its accuracy. Opinions expressed in these reports may change without prior
notice. Culbertson and/or the staff may or may not have investments in any
funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

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